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Started by Gigi76 on Jan 22, 2022 5:28:58 PM
Tax advice- rental property

Tax query in first post.

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Gigi76 - 22 Jan 2022 17:29:04 (#1 of 5)

Doing my tax calculations as while I’m not required to do SA, HMRC don’t have my property tax liability correct in next year’s tax code. It’s prompted me to go back a few years and review how the accounts changed with the rule changes from 2016/17 onwards. And now I think I owe them money.

In 2015 we replaced the windows throughout the property. At the time, I interpreted the rules as the cost being not allowable. Instead we claimed the 10% wear & tear. Under the newer rules, I think the full cost would be allowable. I’m now trying to revisit if my interpretation was correct in 2015/16. For info, we installed 4 double glazed windows; the windows replaced were one broken double glazed, one existing double glazed (functional but not strictly within safety code by that time) and two single glazed windows, so it’s really falling into the grey area of capital v revenue expenditure.

It doesn’t affect the tax liability in the immediate following years as the property was lossmaking, but would affect the loss carried forward which would mitigate the taxable profit in recent years. Thanks!

LobsangRampa - 22 Jan 2022 17:48:04 (#2 of 5)

I think you made a mistake when you took the 10% instead of using the full cost of the windows. It was an either/or deal. I doubt they will let you change your mind but maybe worth a go. Just ask them.

solomongursky - 22 Jan 2022 17:48:39 (#3 of 5)

The general rule is, is it like-for-like. You're not adding extra windows, simply replacing broken ones. It's a repair. Deductible, same with boilers.

LobsangRampa - 22 Jan 2022 17:59:25 (#4 of 5)

And the 10% wear and tear claim you made is irrelevant as it refers to the furnishings and the windows are not furnishings. So you could and should have claimed. Not sure how it works retrospectively. So ignore my first reply.

Gigi76 - 22 Jan 2022 18:14:10 (#5 of 5)

That’s certainly the interpretation I was hoping for. I’m hoping it’s ok to revise as within the 6 years for a mistake. We’ll see what they say!

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